PRESENTATION TITLE

Presented by:Name SurnameDirectorate

Date

BRIEFING TO THE WATER AND SANITATION PORTFOLIO COMMITTEE

WATER SECTOR INSTITUTIONS STRATEGIC OBJECTIVES, TARGETS AND BUDGET

PROJECTIONS2015/16 -2017/18

DIRECTOR GENERAL’S

(MS MARGARET–ANN DIEDRICKS) OPENING REMARKS

29 APRIL 2015

PART A

POLICY AND LEGISLATIVE MANDATES

POLICY AND LEGISLATIVE MANDATESPolicy & Legislation Description

White Paper on Water & Sanitation, 1997

Recognised a need for water boards and public sector entities .

Water Services Act , Act No 108 0f 1997

Give Minister the powers to establish and disestablish water boards and outline the procedure for appointing Board members.

National Water Act, Act 36 of 1998

Gives Minister the power to establish and disestablish Catchment Management Agencies and outline the procedure for appointing board members

Strategic Framework for Water Services

Recommended the Institutional Reforms in the sector.

Public Finance Management Act , Act No.1 of 1999

National Public Entities listed as Schedule 3A and 3B under PFMA.

National Water Resource Strategy-2

Chapter 8 on Water Management Institutions including plan to establish 9 CMAs and Regional Water Utilities

Raw Water Pricing Strategy, 2007

Defines Water Resource Management functions to be charged to users and funding framework for CMAs

National Development Plan, 2012

Regional Water Utilities , CMAs and National Infrastructure Agency to be created .

LEGISLATIVE REQUIREMENTS FOR ENTITIES PLANNING

ENTITY COMPLIANCE DATE LEGISLATION SUBMIT TO

Water Boards Water Boards submits their Corporate Plan, projected revenue and expenditure.

Shareholders Compact Business Plan

31 May PFMA Sec 52TR 29.1

TR 29.2.1WSA: Sec 40.4

Minister and National Treasury

TCTA TCTA submits its Corporate Plan and projected of revenue, expenditure and borrowings

Shareholders Compact

28 February PFMA Sec 52TR 29.1

TR 29.2.1

Minister and National Treasury

WRC WRC submits its 1st and Final draft of their Strategic Plan

1st draft: 1 October Final: 1 April

TR 30.1.1TR 30.1.2

Minister and National Treasury

CMAs CMAs submits their 1st and final draft of their Annual Performance Plan

1st draft: end August 2nd draft: end November Final: end January

TR 30.1.1TR 30.1.2

Minister and National Treasury

Water & Sanitation sector institutions

Trans Caledon Tunnel Authority

(Schedule 2 of PFMA)

Komati Basin Water Authority (Schedule 3A of

PFMA)

Water Research Commission

(Schedule 3A of PFMA)

Water Boards (Schedule 3B of

the PFMA)

Amatola Water

Lepelle Water

Bloem Water

Magalies Water

Mhlathuze Water

Rand Water

Overberg Water

Sedibeng Water

Umgeni Water

MinisterCatchment Management Agencies (Schedule 3A

of the PFMA

Breede-Gouritz

Limpopo

Inkomati-Usutu

Pongola-Mzimkhulu

Berg-Olifants Doorn

Olifants

OrangeTsitsikamma-

Mzimvubu

Vaal

Komati Basin Water Authority (Schedule 3A of

PFMA)

Komati Basin Water Authority (Schedule 3A of

PFMA)

Financial year : 1 April to 31 March

Financial year : 1 Jul to 30 Jun

The key role of Water Sector Institutions is to support South Africa as a developmental state to deliver on Government Developmental

Objectives through :

1. Using water for promoting socio-economic developmental agenda .

2.Reducing inequality through access to water and job creation .

3.Leveraging additional investments for infrastructure development

4.Enabling rural communities to use water for rural livelihoods.

5.Promoting greater citizen participation in decision making

6.Allowing for innovation and knowledge generation.

Relevant Advantages of

Water Institutions

6

KEY STRATEGIC FOCUS AREAS OF INSTITUTIONS

1. Developing, financing and managing national water infrastructure (TCTA, KOBWA, WTE) SIP 1,SIP3,SIP4,SIP6,SIP 9,SIP 18

2. Managing water resources at the catchment level (CMAs)

4. Managing local water resource farmers and the transformation of the water sector with respect to irrigated agriculture (WTE, Water User Associations SIP 18)

3. Managing regional water infrastructure and supporting local government in the delivery of water services (Water Boards)

5. Providing Water Knowledge hub for South African citizens

All in line with national developmental objectives of poverty eradication, creation of jobs, equitable economic growth, sustainable development

7

GOVERNANCE PROTOCOL FOR ENTITIES

List of documents submitted to the Minister Legislation

Policy Statements Sec 39 of Water Services Act, 1997

Shareholder Compacts Treasury Regulation 29.2

Strategic Plans Treasury Regulation 30.1.1

Corporate Plan & projection of revenue, expenditure & borrowings

Sec 52 of PFMA, 1999Treasury Regulation 29.1

Business Plans Sec 40 of Water Services Act, 1997Schedule 4 of National Water Act, 1998

Quarterly Reports Treasury Regulation 29.3.1

Annual Reports Sec 44 of Water Services Act, 1997 Sec 55(1)(d) & 65 of PFMA, 1999

Tariff Increases Sec 42 of MFMA, 2003

Financial misconduct procedures report Treasury Regulation 33.3.1

Materiality & Significance Framework Treasury Regulation 28.3.1

8

Governance protocol for entities

9

Relationship between institutions and DWS

10

WB9

WB9

WB 2

WB 2

CMA 2CMA 2

CMA 1CMA 1

Water board 1Water board 1TCTA TCTA

MinisterMinister

DWSDWS

ParliamentParliament

Public institutions report to the public and Parliament through Annual Reports and Annual Financial Statements and to the Department with quarterly performance reports

WRCWRC

Minister appoints boards; approves

shareholder compacts, Corporate

Plans & Annual Reports

Minister appoints boards; approves

shareholder compacts, Corporate

Plans & Annual Reports

Portfolio Committee reviews reports and

plans (hearings, visits)

Portfolio Committee reviews reports and

plans (hearings, visits)

(1) Oversee institutional establishment;(2) Oversee governance (manage board appointment processes, training etc.); (3) Oversee shareholder compact; (4) Oversee business plans, quarterly performance reports and financial statements etc.

(1) Oversee institutional establishment;(2) Oversee governance (manage board appointment processes, training etc.); (3) Oversee shareholder compact; (4) Oversee business plans, quarterly performance reports and financial statements etc.

Contribution to government outcomes

Effective water resources management critical foundation to achieve the above outcomes

Effective water resources management critical foundation to achieve the above outcomes

11

10

Protected and

enhanced

environment

and natural

resources

10

Protected and

enhanced

environment

and natural

resources

6Efficient economic

infrastructure

6Efficient economic

infrastructure

9 responsive,

accountable, effective &

efficient localgovernment

9 responsive,

accountable, effective &

efficient localgovernment

4Employment & inclusive

growth

4Employment & inclusive

growth

7Vibrant &

sustainable rural

communities

7Vibrant &

sustainable rural

communities

PART B

• ENTITIES PLANS FOR 2015/16 FINANCIAL YEAR

• Strategic objectives• Performance indicators• Spending focus; and • Budget allocation for 2015/16• Jobs Creation

CATCHMENT MANAGEMENT AGENCIES

INKOMATI-USUTHU (IUCMA) AND BREEDE-GOURITZ (BGCMA) STRATEGIC OBJECTIVES

• Water resource protection• Water use management• Integrated water resource planning• Stakeholder interaction and empowerment• Governance• Strategic support

Stakeholder Perspective

Financial Perspective

Developmental & Environmental

Learning & Growth

CMA SCORE CARD Ensure effective,

efficient and sustainable management of water resources in the Water

Management Area

15

SUMMARY OF IUCMA PERFORMANCE PROGRAMMESUB-PROGRAMME INDICATORS 2015/16 TARGETS RATIONALE

Water use management

Water use registrations finalisedRecord of recommendation of water use applications finalisedGeneral authorisations confirmedAudit reports completed for water use complianceLetters sent to water use to apply for validation and verification of water use

10 Water use registrations finalised100% of agricultural temporary transfers applications finalised30% verification in Inkomati 50% validation in Usuthut8 compliance audit reports completed

Statutory requirement function to be performed in terms of NWA

Water resource protection

Water quality monitoring points and samples Reaction to pollution incidentsWarning letters / directives issued for water use contraventions

2712 samples taken to monitor water quality100% of pollution incidents dealt with 1 catchment monitored for river health292 water quality inspections conducted

Integrated water resource planning

Catchment Management StrategyLand use planning and rezoning applications commented onWater quality objective report completed

Finalise integrated water quality management framework

Institutional and stakeholder relations

Learner awareness campaignsSupport to HDIs projects and water related forums and WUAs and IBs

38 stakeholder empowerment workshops conducted20 stakeholder interactions4 newsletters developed and circulated

Generating and managing knowledge (Information systems)

Effective information management 100% electronic document management system maintained

Strategic support Compliance to all planning and reporting prescripts 100% compliance

Governance Compliance to governance requirements 100% compliance

SUMMARY OF BGCMA PERFORMANCE PROGRAMMESUB-PROGRAMME INDICATORS 2015/16 TARGETS RATIONALE

Water use management

Water use registrations finalisedRecord of recommendation of water use applications finalisedGeneral authorisations confirmedAudit reports completed for water use complianceLetters sent to water use to apply for validation and verification of water use

70% Water use registrations finalised80% water use licences (record of recommendation) finalised100% general authorisations confirmed60 audit reports completed150 validation and verification letters sent

Statutory requirement function to be performed in terms of NWA

Water resource protection

Water quality monitoring points and samples Reaction to pollution incidentsWarning letters / directives issued for water use contraventions

70 water resource points monitored100% of pollution incidents dealt with 2 water quality monitoring projects implemented

Integrated water resource planning

Catchment Management StrategyLand use planning and rezoning applications commented onWater quality objective report completed

50% Catchment Management Strategy completed100% land rezoning applications commented on2 water quality objectives reports completed

Institutional and stakeholder relations

Learner awareness campaignsSupport to HDIs projects and water related forums and WUAs and IBs

300 learners reached during various water campaigns4 newsletters developed and circulated10 social responsibility projects supported18 water related forums maintained

Generating and managing knowledge (Information systems)

Effective information management 30% SAP implementation100% electronic document management system maintained

Strategic support Compliance to all planning and reporting prescripts 100% compliance

Governance Compliance to governance requirements 100% compliance

WATER BOARDS

STRATEGIC OBJECTIVES• Ensure viability and sustainability.

• Stakeholder engagement.

• Appropriate planning for adequate water resources.

• Water demand management.

• To ensure sustainable growth.

• Effective and efficient communications.

• Ensure compliance with legislative prescripts and policies.

• Financial sustainability.

Selected objectives & indicators for water boards

20

Performance Objective

Alignment Outcomes/Impact

Indicators MeasureMinisterial Outcomes DWS Strategic

Plan

1. Water Quality Compliance

MO A, OP1, Ta) & c).MO B, OP2, Ta)

SO 2.5 & 3.4 Water quality standards met Test results, SANS 241 % compliance

2.Non Revenue Water MO A, OP1, T a) MO B,OP2, T a)

SO2.2, 2.5, 2.6,&2.7

Reduced levels of unaccounted for water (UAW)

Water lost as a % of total water produced

%

3. Reliability of supply MO A > GOP1, Ta), b) & c). OP2, Ta)

So1.1, 1.2&1.3 No unplanned interruptions to supply exceeding 24 hours

% number of days supply disrupted divided by total number of possible supply days

%

4. Financial Reporting Compliance

MO A > G SO 6.5 & 6.6 unqualified audit report Annual external audit Qualified/Unqualified

5. Increased Access to Services

MO A, B &DOP1, Ta), b) & c). OP2, Ta)

SO 1.1,1.2, 1.3,2.2 and 4.1

Contribution to national objectives

CAPEX spend /projects CAPEX spend or number of

expansion projects

WRC

WRC STRATEGIC INTENT• The WRC serves as SA’s water-centred knowledge

hub providing the nation with knowledge for sustaining its most precious resource, water.

• The WRCs strategy for knowledge creation and its research portfolio is underpinned 4 main key strategic areas:

Water resource managementWater linked ecosystemWater use and waste management Water utilisation in agriculture

TCTA

TCTA Strategic Objectives• Deliver to all mandates provided by the

Minister, in accordance with specifications and within the agreed timelines and budget

• Facilitate social transformation and build sustainable communities by providing jobs and empowerment

• Operate the business projects and processes in a cost-effective manner, conscious of the imperatives of PFMA

24

TCTA Strategic Objectives cont.

• Build the knowledge and capability of the organisation to generate lessons for project improvements, in pursuit of greater efficiencies in water delivery

• Ensure the continuous availability of high-calibre human capital for delivering on organisational mission into the future, while remaining a value-adding agile entity.

25

TCTA contribution to government

26

Outcomes Government Outcomes Department Priorities TCTA Contribution

4 Decent employment through inclusive economic growth

(1) Contribute to Economic Growth, Rural Dev, Food Security and Land Reform (outcomes 6, 7 and 9)

Emphasis on job creation in all construction contracts and Providing cost effective water infrastructure as an enabler for economic growth

5 A Skilled and capable workforce - Through the projects and internal training develop entrepreneurship in small business and up-skill the workforce to enable South Africa to compete in the world markets

6 Efficient, competitive and responsive economic infrastructure network

(1) Contribute to Economic Growth, Rural Dev, Food Security and Land Reform (outcomes 6 and 7)

(3) Strengthening the regulation of the water sector - (outcome 6 and 10)

Providing a comprehensive financial and implementation package to ensure the most cost effective solutionSupport to other water sector institutions to enable them to deliver on their mandate7 Vibrant, equitable and

sustainable rural communities with food security for all

8 Sustainable human settlements and improved quality of household life

(1) Contribute to Economic Growth, Rural Dev, Food Security and Land Reform (outcomes 6, 7 and 9)

Provision of affordable infrastructure as well as responsible resettlement programmes inclusive of economic livelihood

9 A responsive, accountable, effective and efficient local government system

(4) Support local government to deliver water services (outcome 9)

Support to other water sector institutions to enable them to deliver on their mandate

10 Environmental assets and natural resources that are well protected and continually enhanced

(2) To promote Sustainable and Equitable Water Resources Management (outcome 10)

Contribute to the development of knowledge in the sector (desalination, water reuse)

(3) Strengthening the regulation of the water sector (outcome 6 and 10)

Participation in the workshops on Institutional Reform and Realignment

12 An efficient, effective and development oriented public

(6) Build capacity to deliver Quality Services Comprehensive internal training programme to enable TCTA to deliver quality products in the most efficient manner.

Financial ModelFinancial Model

27

• Funding is off-Balance Sheet.

• Funding relies only on implicit guarantees from Treasury (excluding Lesotho Highlands (LHWP), which is explicitly guaranteed)

• All projects are ring-fenced, i.e. no cross-subsidisation is allowed

• Debt repayment is funded through water tariffs, over 20 years

• Costs of infrastructure reflected as asset until debt fully repaid, then handed back to DWS (LHWP – intangible asset – right of receipt of water – owned by Lesotho Highlands Development Authority)

Financial Model (cont….)• Full cost recovery from water sold to end-users

• Constant tariff in real terms which increases with:– Consumer Price Index annually– Projects may need to increase borrowings in the first number of years

after completion to maintain constant tariff

• Deficit is intended to ensure on-going affordability for end users; the deficit reverses after a few years, and is not related to TCTA’s feasibility as a going concern.

Overview of water sector entities budget

Medium term budget

Rand thousand

2014/15 2015/16 2016/17 2017/18

TCTA 3 985 000 4 370 000 5 836 000 8 233 000

CMAs 96 202 586479 624280 668193

WRC280 381 311 334 258 502 270 543

Water Boards

15 738 659 15 394 534 19 248 522 21 204 516

TOTAL

20 100 242 20 662 347 25 967 304 30 376 252

29

Overview of water sector staff establishment for 2016/17

30

Jobs created and Estimated 2014/15 and 2015/16Entity Jobs Created 2014/15 Estimated 2015/16

1. Amatola Water 50 1546

2. Bloem Water 716 1963

3. Lepelle Northern Water 15 120

4. Magalies Water 539 570

5. Mhlathuze Water 597 588

6. Overberg Water 6 15

7. Rand Water 3556 8870

8. Sedibeng Water 371 750

9. Umgeni Water 1847 600

10. Breede CMA 0 0

11. Inkomati CMA 15 10

12. TCTA 3242 2309

13. WRC 5 14

Total 10 959 17 355

[1] Disestablished –debt transferred to Sedibeng Water[2] Disestablished –debt transferred to Rand Water[3] Disestablished –debt transferred to Sedibeng Water

Debt owed to water boards by municipalities - end of Feb 2015

Name of water board

OUTSTANDING BALANCE CURRENT DAYS 30 DAYS 60 DAYS 90 DAYS 120+ ARREARS

Amatola 24 963 541 24 208 020 755 521 0 0 0 755 521Bloem Water 118 306 039 42 533 515 4 322 442 1 412 751 11 745 904 58 291 427 75 772 524Botshelo Water 191 207 118 7 875 274 7 539 436 6 720 622 5 991 714 163 080 072 183 331 844Bushbuckridge Water 397 868 143 20 230 683 18 396 624 16 806 660 16 806 660 325 627 516 377 637 460Lepelle Northern Water 369 861 590 43 465 809 12 742 111 12 914 141 8 974 774 291 764 755 326 395 781Magalies Water 61 688 151 26 024 391 7 294 854 3 038 153 5 410 374 19 920 379 35 663 760Mhlathuze Water 26 049 776 17 988 832 8 060 944 0 0 0 8 060 944Overberg Water 1 885 481 1 421 738 62 430 61 630 60 915 278 768 463 743Pelladrift Water 673 826 252 875 217 006 203 945 0 0 420 951Sedibeng Water 1 150 481 463 61 443 288 65 126 903 44 926 444 48 799 706 930 185 122 1 089 038 175Rand Water 941 702 148 915 159 923 26 390 979 151 246 0 0 26 542 225Umgeni Water 206 493 547 193 090 793 13 140 137 71 465 93 261 97 891 13 402 754

TOTAL 3 545 704 0121 374 326

487 172 218 462 88 851 990 117 433 759 1 792 873 314 2 171 377 525

DEBTORS AGE ANALYSIS

100.00% 38.76% 4.86% 2.51% 3.31% 50.56% 61.24%

CONCLUSION

• Water Boards have provided indicative targets and financial projections as their plans will only be submitted end of May 2015.

• Cost recovery issues remain a challenge with negative impact on planning for 15/16 and beyond.